Public donations require public accountability

Every year, charitable organisations, service clubs, foundations, and other non-profit bodies raise substantial sums of money from the public. These contributions are often made by individuals and even overseas organisations who wish to support worthy causes and improve the lives of others.

When anyone contributes money to a charitable or service organisation, they become stakeholders in that organisation. Donors are not merely providers of funds. Their generosity enables these organisations to function and carry out their prime activities. While they may not require legal ownership rights, they have a legitimate interest in knowing how their contributions are being utilised and whether the organisation is achieving the objectives for which the donations were sought. The reputation of the nation as well as the relevant organisation may be at stake here. Whilst on the subject, we are reminded of the doubts raised in the Helping Hambantota and the more recent Rebuilding Sri Lanka funds.  

However, once donations are made, the donors and the purported beneficiaries are frequently left with little information about how the funds were ultimately utilised. While most organisations undoubtedly act responsibly, transparency should not depend solely on trust. It should be supported by proper disclosure and accountability.

In the corporate sector, companies are required to prepare financial statements and make them available to shareholders and regulators within specific deadlines. Public companies are subject to even greater disclosure requirements because they utilise funds provided by investors. Should not a similar principle apply to organisations that seek financial support from the public?

Donors should be able to ascertain, among other things:

• Personal details of those running the organisation.
• Total funds collected during the year, including from other sources.
• How the funds were spent.
• What proportion was used for administration and fundraising expenses.
• How much reached the intended beneficiaries. 
• Whether the organisation remains financially sustainable.
• Testimonies from beneficiaries.

Making audited financial statements publicly available on a timely basis would strengthen confidence in the charitable sector and encourage greater public support. Transparency reassures donors that their contributions are being used effectively and for the purposes for which they were intended. However, accountability is most meaningful when information is made available promptly. Financial statements published several years after the relevant events, provide limited assistance to donors seeking to assess the current stewardship of funds.

Pending the introduction of any legislative requirement, charitable organisations should voluntarily adopt this practice. The acknowledgement of a substantial donation should not be limited to the issuance of an official receipt. The donor should also be provided with a copy of the organisation's latest audited financial statements each subsequent year. 

In an era where organisations increasingly rely on public generosity, transparency should not be optional—it should be an obligation. The Government should therefore consider introducing legislation requiring organisations that solicit or receive public donations exceeding a prescribed annual threshold, to prepare audited financial statements and make them publicly available within a specified period after the end of each financial year. Such statements could be published on the organisation's website and filed with an appropriate regulatory authority where they can be accessed by donors and other interested parties. This would also act as a deterrent to any frauds and misappropriations taking place

Such legislation would not be intended to burden charitable organisations. Rather, it would protect both donors and the many genuine organisations that carry out valuable work. Increased transparency would help distinguish well-governed institutions from those that fail to meet acceptable standards of accountability.

The generosity of the public is one of society's greatest strengths. Preserving that generosity requires public confidence that donated funds are managed with integrity, openness and accountability. Ensuring proper financial disclosure will not only protect donors but also strengthen the credibility and long-term sustainability of the charitable sector for generations to come.

A concerned donor